Bakery in Romania

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Executive Summary

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BAKED GOODS

Trends

The performance of baked goods in Romania was largely dictated by that of bread. Bread remained a staple product with very high consumption per capita and which varied only very slightly in terms of volume. Bread also remained a traditional product due to the fact that Romania is a major producer of wheat, and bread is a product that can easily be prepared from raw wheat harvested from the backyard. Fresh artisanal bread was readily available across the country and its replacement by other bakery products remained limited, which kept bread at the top of baked goods. The still poor purchasing power also created ideal conditions for the high sales of bread due to the demand for cheaper meals.

Competitive Landscape

Artisanal products accounted for two thirds of value sales in 2014, a consequence of the impressive sales of unpackaged/artisanal bread nationwide and the strong fragmentation of baked goods production, with a few manufacturers active at national level but all with value shares fewer than 5% and the big majority accounting for an active presence but only at a small, regional level. The combination of production and window selling characterised the small domestic producers with operations in small cities and the countryside, which represented the practical source of fresh baked products in small communities.

Prospects

The strong leading position of bread and the high per capita consumption are not expected to change baked goods noticeably over the forecast period. Bread will continue to be a staple product, consumed across all income segments of the population and it will continue to dictate the performance of baked goods as a whole. As the effect of the reduction of VAT from 24% to 9% has already been fully felt, the main impact will come from climatic conditions which could affect domestic wheat production, but also from the switch from cheaper unpackaged bread to more expensive packaged/industrial bread, under the positive influence of the economic recovery. A busy lifestyle is estimated to create conditions for higher incomes which, in turn, would increase demand for healthier but more expensive bread.

BISCUITS

Trends

The performance in current value terms for biscuits was the result of the premiumisation of the offer supported by international players present in biscuits. The perception of biscuits as on-the-go snacks or desserts also contributed to the strong current value growth. The volume growth was the result of consumers switching from more expensive chocolate confectionery to biscuits. However, the volume dynamics remained weaker compared to current value growth because low-income consumers preferred to purchase loose biscuits, found in the portfolios of the main manufacturers.

Competitive Landscape

Mondelez Romania SA was the leading player of biscuits in both 2013 and 2014 with 14% and 15% respectively. Its position was due to the excellent performance of its premium brands Tuc, Oreo, Milka, Belvita Start and Grany, supported by heavy advertising campaigns and extended distribution. Dobrogea Grup challenged with 12% and 11% value share respectively, owed mainly to its Eugenia brand, which benefited from strong consumer recognition after surviving successfully for decades in Romania. The rebranding of Eugenia as a quality sandwich biscuit available at an affordable unit price propelled it to the top of brands in biscuits overall in 2013 and 2014 with a 9% and 8% value share respectively.

Prospects

The performance of biscuits over the forecast period will be affected by the economic recovery and the increased confidence of consumers in the future. This estimate of the future will lead to better penetration by premium brands. However, the purchasing power recovery is expected to remain under the performance of the economy generally, so consumers will continue to value economy and standard brands.

BREAKFAST CEREALS

Trends

The growth of breakfast cereals was as a result of the increasing confidence in the future which followed the strong economic performance. Lifestyle changes, despite the still poor purchasing power, also contributed to this growth. Urban areas accounted for the majority of sales, with the urban population enjoying higher incomes compared to the rest of the country. Consumers in urban areas were more attracted by healthy food, and breakfast cereals were perceived to satisfy the increasing demand for such products.

Competitive Landscape

Nestlé Romania led breakfast cereals with an indisputable 41% value share in 2014. In fact, it was the leader over the review period as a whole due to its extended distribution, advertising campaigns and promotions, to which was added the good name of Nestlé Romania. The company’s presence in all product areas contributed to this outstanding performance. The following players were domestic companies in the majority but were far behind the leader due to their presence being limited to the largest flakes and the most dynamic muesli.

Prospects

The expected sales growth of breakfast cereals over the forecast period will be the result of lifestyle changes for the urban population, who are increasingly educated and demand more healthy, nutritional food. Sales will continue to be concentrated in large cities, while the majority of the rural population will continue to ignore the products. Meanwhile, the perception of breakfast cereals as capable of providing wellbeing would bring them to the attention of medium- and lower-income consumers although demand in this case would be focused on cheaper domestic flakes and muesli plus private label.

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